Question

Builder Products, Inc., uses the weighted-average method in its process costing system. It manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Cooking, is given below for May:

Production data:
Pounds in process, May 1; materials 100% complete; conversion 90% complete		82,000
Pounds started into production during May		470,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 70% complete; conversion 30% complete		42,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	152,300
Conversion cost	$	52,300
Cost added during May:
Materials cost	$	791,650
Conversion cost	$	287,390

Required:

1. Compute the equivalent units of production for materials and conversion for May.

2. Compute the cost per equivalent unit for materials and conversion for May.

3. Compute the cost of ending work in process inventory for materials, conversion, and in total for May.

4. Compute the cost of units transferred out to the next department for materials, conversion, and in total for May.

5. Prepare a cost reconciliation report for May.

Answer 1

Units completed = 82,000 + 470,000 - 42,000

= 510,000

1.

Equivalent units = Units completed + (% Completed X Ending inventory)

Material = 510,000 + (70% X 42,000)

= 539,400

Conversion cost = 510,000 + (30% X 42,000)

= 522,600

2.

Cost per equivalent unit = Total cost / Equivalent units

Material = ($152,300 + $791,650) / 539,400

= $1.75

Conversion cost = ($52,300 + $287,390) / 522,600

= $0.65

3.

Cost of ending inventory:

Material = (70% X 42,000) X $1.75

= $51,450

Conversion cost = (30% X 42,000) X $0.65

= $8,190

Total = $51,450 + $8,190

= $59,640

4.

Cost of units transferred out:

Material = 510,000 X $1.75

= $892,500

Conversion cost = 510,000 X 0.65

= $331,500

Total = $892,500 + $331,500

= $1,224,000

5.

Cost to be accounted for:
Cost of beginning work in process inventory	$204,600
Cost added to production during the period	$1,079,040
Total cost to be accounted for	$1,283,640
Cost accounted for as follows:
Cost of units completed and transferred out	$1,224,000
Cost of ending work in process inventory	$59,640
Total cost accounted for	$1,283,640